New Jersey bill to place prediction markets under state tax

• New Jersey Senate Bill 4447 would create licensing, tax and oversight rules for prediction markets.
• Sports-related contracts would face the state’s 19.75% wagering tax plus a 10% surcharge.
• Political, death and catastrophic-event contracts would be banned outright, with fines up to $1 million a day for violators.

New Jersey Senate President Nicholas Scutari and Sen. Paul Sarlo have introduced Senate Bill 4447, legislation that would establish a state regulatory and taxation framework for prediction markets.

The bill, filed June 11, was referred to the Senate Budget and Appropriations Committee and has not yet been scheduled for a hearing. It would require operators offering sports-related event contracts to secure state authorization, while banning several other contract categories outright.

The proposal lands as states, federal regulators and prediction market operators continue to dispute who holds jurisdiction over the fast-growing sector.

New Jersey had already issued a cease-and-desist order against Kalshi, and in April the Philadelphia-based Third Circuit Court of Appeals ruled 2-1 that the state could not block the platform from operating within its borders, finding the CFTC holds exclusive jurisdiction over its sports contracts.

The price of entry

Under the bill, companies offering sports-related event contracts in New Jersey would need either a standard sports wagering license or a newly created athletic event market operator license paired with an existing sportsbook partner.

Oversight would fall to the Division of Gaming Enforcement, which would set rules covering consumer protections and market integrity.

Operators would face an initial licensing fee of $5 million, with renewal costs reassessed annually by regulators. The bill also sets a minimum participation age of 21 and requires self-exclusion programs, deposit controls, and age verification procedures.

Scutari and Sarlo wrote in the bill:

“The bill requires all prediction markets to meet basic standards, including that the prediction markets disclose the source of information used to settle a market and take practical steps to limit potential manipulation, insider trading, or fraud in violation of State law.”

Stacking the tax bill

Revenue from speculative positions opened by New Jersey residents would carry a 10% surcharge, payable quarterly into the state’s General Fund. Sports-related contracts face an additional layer: the state’s existing 19.75% online sports wagering tax, stacked on top of the surcharge.

The structure is designed to put prediction market operators on comparable tax footing with licensed sportsbooks already operating under New Jersey gaming law.

Prohibited types of contracts

The bill would prohibit political event contracts, death markets and contracts tied to catastrophic events entirely. Operators that continue offering banned products could face court-ordered injunctions sought by the state attorney general, plus civil penalties of $1 million per day for continued violations.

Separate criminal penalties target public officials. State and local officers, employees, legislators and certain family members would be barred from trading on prediction markets tied to insider information. Violations carry fourth-degree criminal charges, up to 18 months in prison and fines of up to $10,000.

Operating an unlicensed athletic event market would carry fines of up to $25,000 for individuals and $100,000 for companies.

A nationwide legal war

Senate Bill 4447 is the second prediction market bill introduced in New Jersey this year, following an earlier, narrower measure from Sen. Shirley Turner and colleagues in February.

It also lands days after the Commodity Futures Trading Commission published a 267-page rulemaking proposal offering its first formal definition of “gaming,” a framework the American Gaming Association has called an attempt to redefine sports betting entirely.

Other states have taken sharply different routes. Minnesota became the first state to criminalise operating a prediction market platform after Gov. Tim Walz signed Senate File 4760 in May; the CFTC sued to block the law within a day.

New Mexico’s attorney general sued Kalshi directly earlier this month over alleged underage access. Nevada regulators have gone further still, filing a contempt motion against the operator this week over geofencing failures.

Sportsbook operators, by contrast, have leaned into the federal route rather than fight it. DraftKings Predictions alone logged $1.3 billion in annualised volume in May, up 24% month over month.